Virtus Investment Partners, Inc.

ladies and gentlemen this is the operator today's conference call will begin shortly until that time your lines will again be placed on hold thank you for your patience again ladies and gentlemen this is the operator today's conference call will begin shortly until that time your lines will again be placed on hold thank you for your patience Thank you. Good morning, my name is Cherry and I will be your conference operator today. I would like to welcome everyone to the Virtus Investment Partners quarterly conference call. The slide presentation for this call is available in the investor relations section of the Virtus website, www.virtus.com. This call is being recorded and will be available for replay on the Virtus website. At this time, all participants are in a listen-only mode. After the speaker's presentation and remarks, there will be a questioning-answer period, and instructions will follow at that time. I will now turn the conference to your host, Sean Wark.

Thank you, and good morning, everyone. On behalf of Virtus Investment Partners, I'd like to welcome you to the discussion of our operating and financial results for the first quarter of 2022. Our speakers today are George Elward, President and CEO, and Mike Engerthal, Chief Financial Officer. Following their prepared remarks, we'll have a Q&A period. Before we begin, please note the disclosures on page two of the slide presentation. Certain matters discussed on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and as such are subject to known and unknown risks and uncertainties, including but not limited to those factors set forth in today's news release and discussed in our SEC filings. These risks and uncertainties may cause actual results to differ materially from those discussed in the statements. In addition to results presented on a GAAP basis, we use certain non-GAAP measures to evaluate our financial results. Our non-GAAP financial measures are now substitutes for GAAP financial results and should be read in conjunction with the GAAP results. Reconciliations of these non-GAAP financial measures, the applicable GAAP measures, are included in today's news release and financial supplement, which are available on our website. Now I'd like to turn the call over to George. George?

Thank you, Sean. Good morning, everyone. I'll start with an overview of the results we reported earlier today, and then Mike will provide more detail. Our first quarter financial and operating performance, in the context of the challenging market environment, was strong, as while we did have net outflows in open-end funds, the quarter also included strong sales in all product categories, including meaningful growth in funds and institutional, continued positive net flows in retail separate accounts and institutional, Higher operating income and earnings per share has adjusted compared with the prior year period and increased capital return to shareholders. This was also the first full quarter to include contributions from each of our three recent strategic transactions, Allianz GI, Westchester Capital, and Stone Harbor, that collectively added complementary and differentiated investment strategies, significantly increased scale, and enhanced our distribution capabilities while being financially accretive. I would also note that of our top 20 funds with positive net flows in the quarter, nine were managed by either AGI, Westchester, or Stone Harbor. For our most recent transaction, Stone Harbor, the integration is proceeding as expected and going well. We are making particularly good progress integrating Stone Harbor's global distribution, which will augment our existing resources and enhance non-U.S. distribution opportunities for all our affiliates, including in areas where we previously had limited presence. We are also making progress integrating Stone Harbor's end-to-end operating platform, which will also be available to our other affiliates. Turning now to a review of the results, total assets under management, after reaching their highest level last quarter, declined 2% to $183.3 billion due to market performance and net outflows, mostly offset by the addition of $14.7 billion of AUM from Stone Harbor on January 1st. Sales momentum continued despite the significant market volatility. with $9.4 billion of inflows up sequentially from $8.7. The momentum, particularly in this type of market, reflects the effectiveness of our distribution capabilities and attractive range of investment strategies that can appeal to investors in varying market environments and as investor preferences and needs shift. For the quarter, open-end fund sales grew meaningfully with increases in most strategies and institutional sales reached their second highest quarterly level. For net flows by product, we had net outflows in open-end funds, while institutional and retail separate accounts continued to generate positive net flows. Fund net outflows were higher sequentially, impacted by higher redemptions driven by investor behavior in a volatile market, particularly in the more growth-oriented equity strategies, though there were notable areas of strength, including strong positive flows in bank loans, alternatives, and mid-cap equities. Fund net outflows were more pronounced in January, with some subsequent improvement thereafter. Institutional net flows were positive for the sixth consecutive quarter, with continued traction at multiple affiliates and from both existing mandates and new accounts, including a significant addition to a Stone Harbor mandate. Non-U.S. mandates contributed meaningfully to institutional flows, reflecting our investments in distribution and resources over the past several years. Retail separate accounts generated positive net flows for the 16th consecutive quarter with a 6% organic growth rate. In terms of what we're seeing in April, open-end fund flow trends remain consistent with the first quarter, as does the market volatility. Areas of strength in open-end fund sales and flows continue to include bank loans as well as alternatives. In terms of institutional, our current pipeline of potential business is the strongest we've seen, though it is early in the quarter and markets remain challenged. Our first quarter financial results reflected the impact from the more challenging markets that began in January, as well as our normal, seasonally higher employment expenses. The sequential decline in operating income and margin was primarily a result of those items. Looking at the more comparable year-over-year period operating income, I suggest an increased 16%, reflecting revenue growth from higher average assets, including the benefit of the three transactions. Earnings per share, as adjusted, increased 16% over the first quarter of 2021 to $7.87. The sequential decline in EPS reflected the market-driven revenue decline and the seasonal employment expenses. Turning now to capital, we increased the level of stock buybacks from $25 million in the prior quarter to $30 million and net settled an additional $13 for a total of $43 million repurchased or net settled during the period. Including our dividend, which we raised in the second half of last year, we returned $57 million to shareholders in the first quarter, which is more than double the $26 million we returned in the first quarter of last year. This increased return of capital is reflective of our balanced approach to capital management that provides flexibility to prioritize different elements as circumstances warrant. Our balance sheet remains strong. We ended the quarter with modest net debt position of $48 million and as the first quarter represents our highest quarter of cash utilization, given the timing of annual incentives, and the quarter also included transaction and revenue participation payment. With that, I'll turn the call over to Mike. Mike?